The Ledger
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Costco was the first company to hit $3 billion revenue within six years
“And three billion in less than six years, which is the first company ever to hit that milestone, too.”
Costco's Kirkland Signature generates more revenue than all of Nike
“Their store brand, Kirkland Signature, does more revenue alone, not including anything else in the store than all of Nike.”
Schultz: Costco Co-Founder Jeff Brotman Invested in Starbucks' 1987 Buyout
“First, Jeff Brotman invested in Starbucks in the round to buy Starbucks.”
Costco's fully owned Nebraska facility processes two million chickens per week
“They learned, and then they proceeded to build their own fully-owned facility in Fremont, Nebraska, outside of Omaha, And build relationships with 150 local farmers in the surrounding area. I mean, this is nuts. That facility processes two million chickens a w…”
Costco's merchandise shrinkage rate is an astonishingly low 0.15% of sales
“The shrinkage, or the unaccounted for merchandise, At Costco today is astonishingly low. It is 0.15% of sales.”
An average Costco warehouse generates $269 million in annual sales
“Two hundred and sixty-nine million dollars of sales per store on average per year.”
Costco's first China store reached 400,000 members in two years
“The first store in China opened in twenty-nineteen, which popped to 400,000 members within two years. The U.S. At maturity is at 68,000 members.”
Costco generates approximately ten times more revenue per SKU than Walmart
“The average revenue per product, because of the SKU count, at Costco is about 10 times Walmart.”
Costco enforces a strict 14% markup cap on all standard products
“They have enforced a strict cap on the margin that they are willing to make on any product. So they have decided internally that they are not allowed to mark up anything more than 14% above what these suppliers sell it to them for.”
Costco's 2022 first-year store sales exceeded 2014 cohorts' fifth-year sales
“Year one of a store opened last year was better than year five of a store opened in 2014.”
A 2001 coffee with Jim Sinegal inspired Amazon's core low-price philosophy
“Jeff has this coffee with Jim, and Jim explains this philosophy to Jeff. Jeff comes back to Amazon HQ the next day and is like, I'm reversing the policy, and says exactly what you just said. There are two types of companies in this world. Companies that work h…”
Costco expanded its US warehouse footprint over a decade while Sam's Club shrank
“The average Sam's Club only generates about half the revenues of a Costco, and that gap has widened over time. Given the unit economics of the business, that's a tough hurdle to overcome, which explains why Sam's Club has a smaller unit base today than it did …”
Costco operates at an 11% gross margin and will never expand it
“Even though Costco is only an 11% gross margin business, and only ever will be an 11% gross margin business, it's still a pretty amazing business to own.”
Costco Executive members represent 45% of global memberships but 73% of sales
“Interestingly, 45% of paid members worldwide are executive members. But those members represent 73% of sales.”
Costco generates $1,800 per square foot versus Walmart's $600 and Target's $450
“Target's about 450 dollars per square foot of revenue. Walmart's about 600 dollars. Costco is 1800 dollars per square foot of revenue.”
Gilbert: Costco turns inventory in 27 days, financed by vendors
“On average, it takes them
27 days to sell through their entire inventory, which means that's on net 30 terms, three days of grace where the inventory is actually financed by the vendors and then some.”
Gilbert: Trader Joe's and Costco each stock only about 4,000 items
“Trader Joe's and Costco both only stock about 4000 items at a time.”
Rosenthal: Historical fair trade laws banned selling below manufacturer-set minimum prices
“There are a set of laws called fair trade laws that impact Everything that retailers sell in this era. It's actually kind of crazy. It's a holdover from the depression. We talked about it on the Costco episode where it was illegal for retailers to sell goods b…”
IKEA's gross margins sit in the mid-30s versus Costco's 13%
“Ikea's gross margins are, like, mid-thirty percent, and Costco's are 13%.”
Ben Gilbert: Apple and Tiffany lead retail with $5,500 and $3,000 sales per foot
“Costco is 1800 dollars a foot. They are trying to maximize their dollar per foot. Walmart is about 600. Target is about 450 dollars. And then these, like, crazy businesses, just to compare it to the all-time greatest, Tiffany is 3000 dollars a foot for jewelry…”
Costco maintained credit card exclusivity with American Express until 2016
“And this actually continued until 1991 for many of their merchants and for Costco, Went all the way to 2016, where they had the exclusive agreement with, ah, Amex, and if you were gonna use a credit card at Costco, it had to be Amex.”
Costco operates on negative working capital by paying suppliers after selling merchandise
“They make the suppliers wait until they've been paid, and then they're scheduled to pay only after they're scheduled to sell.”
Roughly 25% of Costco's SKUs are rotating, non-staple treasure hunt items
“And so today I think about 25% of their SKUs are these treasure hunt items.”
Nearly all Costco executives have tenures exceeding 25 years
“If you look at their executive team at Costco today, Basically, all of them have been there for over 25 years. The only vice presidents at the company who have not are the digital e-commerce people that they had to bring in to address some issues.”
Costco turns its inventory 12.4 times yearly compared to Walmart's 8
“Costco actually turns their inventory 12.4 times per year. And just for comparison, Walmart turns their inventory eight times per year. Home Depot is more like five times per year.”
Costco achieves a 93% annual member renewal rate in the United States
“93% of members in the U.S. Renew every single year.”
Costco generates over $730,000 in annual revenue per employee
“And this is why they generate over 730,000 dollars of revenue per employee.”
Kirkland Signature is capped at a 15% markup at Costco
“The only exception to this is Kirkland Signature, where they cheat a little bit and let themselves go up to 15%.”
Costco is the third-largest retailer in the US behind Amazon and Walmart
“And you're the third biggest player in the largest market, you know, America, behind Amazon and Walmart.”
All 160 Costco market and country managers meet at headquarters every month
“All of their market managers and country managers come to headquarters for two days every single month. So no matter what market you manage, you fly to Issaquah. That's a 160 people. To all sit in a room for two days and just talk about what's working, what's …”
Membership fees historically account for 70% of Costco's operating income
“It is accurate to say that membership fees represent about 70% of the company's operating income, with the other 30% of the profit margins coming from retail. It's been a little bit more than 30% in recent years, but that's sort of the historical split.”
Costco maintains a remarkably low 7% workforce attrition rate after year one
“After the first year, Costco today has only a seven percent attrition rate among their workforce.”
The typical Costco shopper earns $125,000, roughly 70% above the US median
“There was an independent research firm that found that the typical Costco consumer makes about a 125,000 dollars a year in household income and has a four-year degree. Walmart, by comparison, has a median income of about 80,000 dollars. And keep in mind, the m…”
A $10,000 investment in Costco's 1985 IPO generated a 330x return by 2023
“If you bought 10,000 dollars of shares in their IPO in 1985, you would have 3.3 million dollars today, a 330 X, and this does not include the dividends you would have earned along the way, which they've actually done a lot of dividends, including four-ish spec…”
Walmart operates at 24% gross margins, between Costco's 13% and Target's 30%
“If you look at Walmart's twenty-four-ish percent gross margin, so that's basically what they get from the goods that they sell on the shelf, you see, ok, it's less than Target, which makes 29 30% of anything that they sell on the shelf. Well, Costco's gross pr…”